Geopolitical unrest and supply chain disruption are causing a profound energy crisis at a scale unlike any seen in Europe in almost 50 years. This winter, European Union state members could experience severe blackouts and energy rationing, which are predicted to intensify and last at least through 2023. For businesses, these risks to operational continuity threaten reduced operation hours, staff layoffs, or even a complete shutdown of operations. However, by taking strategic action to reduce energy demand and become more independent from the grid, businesses can protect their operations from future energy supply disruptions and become more resilient to energy price spikes.
Contributed by: Ettore Virga, Energy Efficiency Expert, EMEA, Schneider Electric
Ettore supports Schneider's clients on their decarbonization journey by providing energy efficiency services to deliver sustainable roadmaps and technical solutions.
The State of European Energy Markets and Actions Taken to Date
Since 2021, the European economy and most businesses already began to feel the impacts of elevated energy prices and volatility. Between June 2021 and July 2022, the delivery of Russian natural gas (NG) dropped by 60%, causing a natural gas shortage and a tenfold rise in NG prices compared to the past decade. As electricity is often produced by NG combustion, electricity retail prices have also increased by almost 50% year-on-year from July 2021, as reported by the European Commission. By the end of the summer of 2022, gas prices reached historic highs (316 €/MWh on August 26), with the largest year-on-year price increases registered for France (+254%), Greece (238%), and Italy (+234%). Though these prices have dropped recently, inaction is not an option for EU.
To face the ongoing energy crisis, the European Commission (EC) has presented two plans: the REPowerEU and EC energy crisis plans. The REPowerEU Plan aims to eliminate EU dependence on Russian fossil fuels by 2030, including a voluntary 15% gas demand reduction by countries through energy efficiency, diversification of energy supplies, and accelerated roll-out of renewable energy. Under the EC energy crisis plan, EU state members agreed on a voluntary 10% reduction of electricity consumption and a mandatory 5% reduction during peak hours from December 2022 through the end of 2023.
Solving for Energy Security and the Climate Crisis
As stated by Philippe Delorme, Executive VP, Europe Operations at Schneider Electric, “Tackling Europe’s energy security problem and the climate crisis are two sides of the same coin.” The solutions to Europe’s energy security issues and decarbonization goals are the same: electrification, renewables, and digitalization. Reducing dependence on fossil fuels, by increasing electrification and accelerating the clean energy transition, is the foundation to tackling the ongoing energy crisis and reducing emissions. Organizations can use the following steps to build a plan that achieves both goals:
Step 1: Understand your energy usage and identify your level of risk
More than 90% of electrical distribution equipment is not connected to an energy management software, preventing energy consumption from being viewed and analyzed. Measuring and monitoring your energy usage is critical to optimizing how energy is used, making processes more efficient, and identifying power quality issues. Energy monitoring enables tracking of consumption in real-time to immediately see inefficiencies and make quick decisions to save energy and shed load. For example, state-of-the-art sensors and controls have been shown to curtail or manage 10–20% of commercial building peak load.
Step 2: Evaluate longer-term efficiency and decarbonization solutions
While the actions below require longer-term planning, budgeting, and a work schedule, they can deliver a significant return on investment while leveraging modernized efficiency, eliminating dependence on insecure energy supplies, and providing access to even deeper decarbonization.
- Digitize to gain broader and deeper insights into building assets and business performance.
- Modernize building equipment or systems that are running inefficiently or are outdated by upgrading to more modern models.
- Electrify processes by replacing gas-fueled boilers with electric heat pumps and installing EV chargers to supply an electric fleet.
- Adopt Renewables and microgrids by installing on-site renewable energy (e.g., solar, wind, and battery energy storage). Microgrid control systems can maximize green energy use for self-consumption while optimizing when to produce, consume, or store energy to help control costs.
Emergency measures, when combined with a longer-term decarbonization strategy, can help businesses withstand the immediate energy crisis while making facilities more resilient against future problems and paving the way to reach net-zero emissions by 2050.
Partner with Schneider Electric to Improve Operational Resilience and Decarbonization
At Schneider Electric, we provide consulting expertise and access to solutions to help industrial businesses increase resilience to changes in the energy market and decarbonize faster. For companies like Roca Group, we have partnered to accelerate energy management and process automation via digitalization. We are also working with companies like PepsiCo, Walmart, GSK, Amy's Kitchen, and Microplásticos to drive sustainability across their (and our) supply chains.
Schneider Electric’s Sustainability Solutions accelerate decarbonization, electrification, and circularity while improving core business performance metrics such as cost, safety, and quality, helping businesses to:
- Monitor and measure energy consumption
- Reduce building energy consumption
- Reduce energy intensity of processes and utilities
- Avoid emissions from growth
- Extend electrical assets life and reduce waste (circularity)
- Adopt renewables and electrification
- Protect business continuity from climate impact
Now is the time for all businesses to move towards a new energy era, whereby working together we can create a new energy landscape that not only benefits business performance but operates in greater harmony with our planet and nature.